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The US dollar enjoyed a good run against the Japanese yen, as the USDJPY pair traded above the 120.00 resistance area. The Japanese yen weakened a lot recently and traded lower not only against the US dollar, but other major currencies too. One thing to note that the economic releases in Japan was not that bad recently. Example, the Machinery New orders, released by the Cabinet Office registered an increase of 8.3% in December 2014, compared to the preceding month gain of 1.3%. This was a lot higher compared to the expectation as well. Today, the US retail sales report will be released by the US Census Bureau. The forecast is of a decline this time by 0.5% in January 2015. Let us see how the US dollar trades after the release.
There was a critical resistance trend line formed on the hourly chart of the USDJPY pair, which was breached recently and paved the way for more upsides in the near term. The pair traded as high as 120.47 earlier during the Asian session. Currently, the pair is correcting lower towards the 23.6% fib retracement level of the last leg from the 118.32 low to 120.47 high. The key thing to note is the fact the mentioned fib level is also coinciding with the broken trend line. Any further losses might take the pair towards the 50% fib retracement level.
On the upside, initial resistance is around the last high of 120.47 where sellers might take a stand. A break above could take it towards the 120.80 level.
Overall, one might consider buying dips in the USDJPY pair as long as it is trading above the 23.6% fib level.
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Posted By IKOFX Technical Team: Online Forex Broker
Website – http://ikofx.com
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